Volkswagen to build $4 billion Audi SUV factory in US despite job cuts in country | Volkswagen (VW)

Audi has announced it will spend $4bn (£3bn) to build its first factory in the US, as its parent company Volkswagen grapples with the impact of high tariffs imposed by Donald Trump.

The German brand’s chief executive, Gernot Döllner, joined Trump on stage at a campaign rally Saturday night to announce the Macon, Georgia, factory, in an unusual move by a major European brand just days before the U.S. midterm elections.

Trump’s Republican Party is trying to maintain control of both houses of Congress, but its poll numbers are poor as it struggles with rising fuel prices brought on by Trump’s war on Iran, as well as his trade war against some of the United States’ biggest trading partners.

Trump has long tried to convince voters that his tariffs help increase the number of manufacturing jobs in the United States and has seized on any new industrial investment. However, employment in the U.S. vehicle and parts sector has fallen since Trump took office last year.

Audi, Volkswagen’s most important premium brand, has suffered from Trump’s 15% tariffs on imports from the EU as well as the president’s efforts to cut sales of battery-electric vehicles in favor of gasoline-powered cars.

The goal is to build 200,000 SUVs in the new US factory, creating 4,500 jobs. The factory will build the Q7, Q8 and Q9 SUVs, relocating part of production from Bratislava to Slovakia.

Volkswagen said Trump’s tariffs were costing it up to 5 billion euros a year, before the impact of falling sales. The German automaker said this month it was still grappling with “continued strong pressure from import duties.” The automaker has also been forced to move some production of its least expensive cars, like the Jetta sedan and Taos SUV, from Mexico to the United States.

The new factory could escalate tensions in Germany, where Volkswagen has begun cutting up to 100,000 jobs and closing factories. He blamed the job losses on intense competition from Chinese automakers, as well as tariffs and the need to invest heavily in the transition to electric vehicles for markets other than the United States.

Döllner said he accepted the invitation to speak at Trump’s rally out of respect for the United States.

“We plan to bring our largest, most premium SUVs and produce them here in Macon, Georgia,” he said at the event. “It’s a long-term investment because we believe in the American market.”

Volkswagen Chief Executive Oliver Blume told investors in July that “US tariffs create a significant burden and restrict international trade.”

However, the group said there is still demand in the United States for Audi’s large gasoline SUVs, and it plans to produce its largest SUV ever, the Q9, with the American market in mind. Large gas-powered SUVs have played a significant role in global carbon emissions.